American Express
American Express or popularly referred to as Amex, was founded as a joint-stock corporation in 1850 and went ahead to establish its headquarters to Jay street, which came later to be known as the Tribeca in Manhattan. The Company was the first to offer the movement of shipments such as goods, currency, securities in New York, and it monopolized the market for years. The Company shifted its operations in 56 Broadway, where it occupied two buildings, which became its new headquarters, the financial district in Manhattan. The Company prospered sufficiently and purchased a lot in New York on Vesey Street in 55-61 Hudson Street, a busy freight port, and in 1874 it moved in five-Storey at 63 and 65 Broadway, which was previously owned by the Harmony family. The company expansion forced its then-president George Chadbourne Taylor to construct a 21 Storey building in 1916-17. The Pacesetting leadership style placed the President’s decision as critical in setting the bar high, which saw the construction of the America Express company’s biggest headquarters. American Express offers a wide range of financial services from prepaid debit and credit cards for commercial and retail clients. The Company also is a major player in the provision of charge cards, which are monthly, and customers are required to pay off each month. A few years ago, the American express decided to expand its operations in the massive Chinese markets, which became the first foreign card company to be approved in November of 2018 by the People’s Bank of China. However, the Amex has not completely shifted its location and operations from the United States but expanded to form a partnership with Lianlian Group to offer payment processing in China. The Chinese government has been reluctant to open its market to foreign countries, especially in the financial market. The expansion of Amex comes as a strategic plan that will see a major company in the U.S processing transactions in China amid the trade war between the two countries. American Express still maintains its dominance and operations in the U.S, but it is set to benefit more from the large population in China.
In business, Companies strive to exploit other markets with the primary goal of generating more profit. The American Express is no different, and the huge payments market influenced its move to expand to the country’s Chinese market, which fell on there are of expertise. The most suitable leadership exercised in this drastic move to expand the Company’s operations in other areas was Strategic Leadership. Strategic leadership is the most suitable style because it represents the manager’s strategic vision of the Company by persuading and motivating others about making a move in-line with his vision. The American Express was focused on tapping the booming financial market in the world’s most technologized and populated country, which meant more customers and profit. The fact that they were given the go-ahead to enter the market and do transactions without China’s cards provider UnionPay was one of the strategic moves that were set to bring more revenue and offer competition to the longtime UnionPay monopoly. The strategic leadership style was based on the fact that “there are many benefits for international traders to establish an RO in China, including minimal overhead investment and relatively simple foreign-invested enterprise (FIE) approval procedures”(Donston-Miller, 2020). The statement supports that American Express was interested in expansion in china due to the monetary reward. Corporate strategy was the driving factor in the drastic move to expand in foreign markets because it ensured that the Company was aware of its goals. The Amex was concerned with making a profit in the Chinese market, and the corporate strategy would ensure they were on the right track. Additionally, the market level strategy was also essential in establishing a joint venture with other local companies. However, the Company was founded in the United States and has strategically and culturally been exposed to American culture, and thus expansion would require a new leadership style.
The first challenge was to crack the Chinese government reluctant to allow foreign companies to venture into its financial sector. American Express had to negotiate and re-0nergotiate for a long time to be given the green light to operate in the large Chinese market. The leadership difficulty also affected the company expansion plan because it was hard to make decisions. After all, the leader was not familiar with China’s B2B payment systems and how they differed from that of the United States. Furthermore, understanding the cultural patterns of the Chinese people was the most difficult factor that faced the Company because “unlike the U.S. and other regions, China does not have a strong entrenched credit card culture” (Faden, 2020). The author points out that cracking and solving the cultural puzzle for the American Express was difficult because it involved interacting with the local population. Cultural preferences play an integral part in the financial sector. Understanding the form of payments and how to make transactions that do not infringe on the local culture might be a gruesome and tiresome procedure. The American Express thus faced difficulties in leadership in making decisions due to different B2B systems and cultural factors in a market that has only trusted one Company that had created a monopoly in the country. Adopting a democratic leadership style is a good move because it would ensure that all employees in the foreign market are engaged in decision-making. After all, they act as ambassadors to the Company.
When it comes to Amex, the best Goleman’s six leadership styles are visionary, which allows the leader to share the company’s vision with the rest of the team. When the Company first announced the expansion move across the country, the first step involves sharing the employees’ information. The American Express leader outlined the next moves the Company was about to take, which required the leadership and junior staff to understand the vision the expansion move was meant to achieve. The company expansion in China means that most of the staff will come from the local population and democracy. The leadership approach applies here because it helps the leader tap into the crowd’s wisdom, which is best understood by the Chinese employees. However, to fully realize the benefits of democratic leadership style, the America ExpresAmericanrs should incorporate affiliative leadership style by building relationships harmoniously through management of disagreements. Expansion in a new and foreign market means there is a possibility of disagreements due to different ideologies and affiliative leadership will create or rebuild trust. However, this approach can be dangerous because it can lead to lack of direction thus losing the Company’s vision. After building better relationships the leader is tasked with developing and improving employees’ competency and confidence in approaching the new challenges of breaking into a new market, requiring a coaching leadership style. The leaders use one-on-one sessions, which enables feedback that helps to pinpoint employees’ weaknesses. Equipping the employees with the necessary skills was the most important factor in the Amex debut in the Chinese foreign market. When the employees are equipped with the necessary competence and confidence to tackle the American Express new market, the leader can introduce pacesetting leadership styles that demand the team to meet set goals. However, Amex leadership should understand that pacesetter leadership style can lead to unethical behavior. Lastly, the American Express leader expansion plan means they had no familiarity with the local people’s culture and should shun using the commanding leadership style because it comes off as cold or emotionless.
The move is still in the commencement stages, and one cannot state if the move was successful because it is a 50/50 percent joint venture with Lianlian Group, a local company. The expansion move has faced challenges, especially from the U.S-China trade war, with both governments becoming more hostile to each other, thus impacting businesses. Lapustina et al. (2020) claim that “We can expect that China and the US will remain strategic partners despite the increased competition between them. Business-to-business ties will become closer, and mutual understanding of cultures will improve” (p.9). The statement shows that America Express is likely to succeed in the Chinese market because the two countries may continue sharing ideas, especially when it comes to technology and finances. The fact that Amex has an equal local partner means that their operations will face minimal impact in the ongoing US-China trade war. The most important thing about the America Express was making sure that Goleman’s six leadership styles are applied appropriately, which made sure that the difficulties that popped-up such as cultural differences.